As Venture Capital Runs Dry, Women Ed-Tech Founders’ Struggles to Raise Investment Come Into New Focus

Amanda Bickerstaff was as far-off from the Bronx as you may think about.

It was 2019, and the ed-tech CEO was main knowledgeable studying companies firm in Melbourne, Australia, and was tasked with spinning its service mannequin right into a tech-driven providing -– in addition to discovering the funding to do it.

Remodeling the corporate and elevating funds to do it could be the largest problem she confronted since leaving her job as a biology instructor at a struggling public faculty within the Bronx 12 years earlier. It was there she noticed a number of the system’s most urgent issues firsthand and was pushed to make a bigger impression within the educating and studying area.

However now she was up towards a brick wall.

Bickerstaff wasn’t only a CEO who occurred to be a girl, she was the CEO of an organization with three founders who additionally occurred to be ladies. And all 4 of them got here face-to-face with the real-life expertise typically represented by stark statistics, like the truth that solely 2 % of enterprise capital within the U.S. went to all-female based groups in 2023.

The staff confronted the identical dynamics in Australia, the place simply 4 % of smaller-scale enterprise exercise was directed towards solely women-founded corporations in 2023, per a state of the business report. On the time Bickerstaff was elevating funding in 2019, the determine was lower than 1 %.

Girls within the training sector are outnumbered in management positions by their male colleagues. Within the first story of this two-part sequence, EdWeek Market Transient explored the hurdles ladies face in trying to rise via their organizations, and the way some executives have overcome these obstacles.

However the challenges for ladies within the training business don’t finish after they attain the C-suite. Many additionally say they face troublesome odds — and in some circumstances, open skepticism about their management talents — throughout the vital technique of trying to boost capital essential to develop their corporations.

This story explores the fundraising journeys of girls in management positions of training corporations, and the way they broke via.

Prying Open Doorways

Bickerstaff had grown accustomed to what she seen as patronizing feedback and dismissive attitudes from traders. One potential funder made a degree to critique Bickerstaff’s management after getting a glimpse of her packed schedule.

“He stated, ‘Properly your calendar is basically messy, that’s an indication of a disordered thoughts.’” Bickerstaff recalled. “That is somebody who was going to speculate. I used to be simply so stunned.”

The identical potential investor additionally predicated a minor $50,000 funding on the corporate making main operational adjustments, she stated.

Regardless of the headwinds ladies entrepreneurs face in elevating capital, manyfounders have risen to management positions within the Ok-12 business, achievements that a few of them, like Bickenstaff, hint partly to the foundational understanding of faculties they gained as classroom educators.

The outlook for ladies founders attempting to boost funds to gas these concepts nonetheless, is in danger. Throughout all industries, the proportion of girls securing enterprise funds has dropped to only 2 % in 2023, the bottom it’s been since 2016 based on Pitchbook, erasing small positive aspects seen throughout the peak of tech funding growth within the late 2010s. Almost 21 % of funding went to groups with each female and male founders, and the remainder went to solely male groups.

General, the training business is experiencing a dramatic contraction in enterprise capital funding, with whole {dollars} invested dropping to $1.8 billion globally — the bottom fundraising whole in a decade —down from $3 billion in 2023, based on the analysis agency HolonIQ.

The panorama has additionally grown harder as a result of districts throughout the nation are slashing budgets to satisfy monetary shortfalls after federal ESSER funding ends, leaving them with far fewer {dollars} to spend on startups’ merchandise.

The top outcome? An training business the place lots of the individuals who have a deep understanding of its most urgent issues and progressive concepts about the right way to to deal with them have fewer avenues than their male friends to convey these options to life.

The Bootstrapping Choice

Anne Spear is within the thick of it.

Because the CEO and Founding father of Plan Ahead – an early-stage startup that works to assist small Ok-12 districts develop, execute, and monitor strategic plans — she has bootstrapped her firm to a degree the place she’s discovered product market-fit. Reaching that milestone is commonly a prerequisite to securing funding from ed-tech traders – and for Spear, it’s now setting the stage for a funding spherical within the close to future.

She’s additionally going into the method absolutely conscious of the obstacles that ladies face in securing investor help. As an instructional researcher, Spear has studied gender and training, and gender and management, and is aware of the statistics nicely.

“There may be deep, deep structural racism, sexism, and ageism within the startup area,” she stated, pointing to information on the small portion of VC funding going to corporations led by ladies.

Spear, who helped construct out training analysis and consulting agency Hanover Analysis’s strategic planning advisory enterprise, created Plan Ahead after she noticed how troublesome it was for the small districts to afford to create correct, evidence-based strategic plans and implement them successfully.

“There was actually an ‘Aha!’ second once I was attempting to think about the right way to higher facilitate bringing in information into [district strategic plans] in order that they had been extra correct, and I simply realized that expertise might do it,” she stated.

She launched the corporate in the midst of this 12 months with lower than $35,000 in working capital. The progress the startup has made in securing district shoppers means she’s set to not solely break even, however exceed her early objectives.

“That’s big, particularly as a result of we’re very a lot a product that’s priced to small districts,” she stated.

Reaching these objectives, nonetheless, has required exhaustive work and sacrifices on behalf of her staff, Spear stated, and she or he’s wanting towards fundraising as a option to create a extra sustainable operation transferring ahead.

“Financing can typically really feel like a short-term drawback, but it surely units up who you’re, the product you’ll have, and the kind of firm you’ll be. So we’re very diligent about that,” she stated. “We’re a fierce staff. We’re not a determined staff.”

Whereas she is aware of elevating cash in ed tech generally is a wrestle for any firm founder, she stated she has skilled and understands the “-isms” in launching an organization. However she chooses to not give attention to them.

A detailed mentor of Spears as soon as instructed her that she didn’t know what a room stuffed with males considered her when she walked right into a room – and she or he didn’t care.

“‘I stroll into the room, and I’m myself. And that’s labored for me,’” Spear recalled the lady saying. “I’ve adopted that.”

Lakshmi Balachandra, a Babson School professor who research entrepreneurship and its intersection with gender, stated ladies founders are anticipated to imitate male habits traits all through the pitching course of, corresponding to having a extra forceful character.

On the identical time, ladies can’t be seen as coming throughout as too rigid or demanding, she stated.

“It’s exhausting once you’re a girl in a management position,” she stated, including that the expertise is twice as burdensome for ladies of colour who face one other layer of bias, whether or not express or implicit. “You’re strolling a stability beam. There’s no proper option to be.”

Harder Period for Ed Investing, General

The enterprise capital ecosystem within the ed-tech area is in the midst of a shift post-pandemic — one that might problem the expansion of early-stage startups and efforts by ladies founders to safe capital, traders within the area stated.

Generalist traders that entered the area throughout the Covid-era, attracted by low rates of interest and districts’ desperation for tech-centric instruments, at the moment are exiting, many after being burned by overpaying for overhyped startups that didn’t ship on their lofty targets, stated Amy Nelson, managing companion at education-focused VC agency Rethink Training.

In some methods, that shift is nice information for ed-tech specialist companies like hers, she stated, since they’ll have the ability to ink offers with out having to lure founders with unrealistic valuations.

But as a result of skilled ed-tech traders higher perceive typical outcomes and are going to be disciplined about how they deploy their funds, that might tighten entry to capital, general, together with for corporations based by ladies.

There will probably be good corporations that “are going to be capital-starved and will not have the ability to make it, notably people who need to increase type of subsequent development fairness,” Nelson stated.

It could assist when ladies like Nelson are making choices about which training investments to help.

The extra ladies who’re making funding choices, the extra women-founded corporations that get funded, analysis exhibits: A Kauffman Fellows report launched a number of years in the past discovered that ladies traders are twice as more likely to again feminine founders

Many ladies main education-focused VC companies arrived in these positions through the teacher-to-entrepreneur pipeline. The training business stands out amongst different tech-centric fields in terms of gender parity due partly the big variety of ladies who start their training careers in educating. Traders and entrepreneurs within the area stated dominance of that workforce creates a big pool of potential feminine firm founders, who in flip can set out on the trail to take roles as entrepreneurs, CEOs, after which post-exit, traders.

About 39 % of the founders CEOs in Rethink’s portfolio are ladies, she stated, and they’re “persevering with to see and communicate with many very robust ladies CEOs and founders as we’re enthusiastic about our future investments.”

The agency doesn’t give attention to gender-equity quotas, she stated — it invests in nice concepts. And people nice concepts typically come from, and are finest executed by, founders who’re attempting to unravel issues they’ve confronted every day.

“We discover in training that there’s a large quantity to be stated for having expertise,” Nelson stated. “You must perceive their ache factors. You must perceive their limitations and the way they give thought to buying choices.”

She is cautious to warning, nonetheless, that elevating enterprise capital is just not the one path an ed-tech startup can take to develop and scale. Firms which have labored to bootstrap their development, are in a position to construct resilience and keep lean, which may finally assist construct a stronger, extra sustainable firm for the lengthy haul, she stated.

Assembly prospects’ wants and bringing in income needs to be the highest precedence, adopted by constructing fundraising to help these aims, she stated.

“Elevating cash ought to by no means be the purpose,” she stated. “It needs to be in service of the enterprise that you just’re attempting to construct.”

The Instructor-Entrepreneur Pipeline

Emily Foote is aware of the teacher-to-venture capital pipeline nicely.

The companion at Osage Enterprise Companions, a Philadelphia-based early-stage VC agency targeted partly on the training area, grew up only a few blocks from Metropolis Ave, a foremost site visitors artery in Philadelphia and a visually jarring dividing line between the town’s rich Fundamental Line suburbs and its most under-resourced neighborhoods.

The disparity between the training she acquired within the suburbs, and the dearth of alternatives for pals only a few blocks away drove her to pursue educating, the place she noticed up-close the mammoth points faculties had been wrestling with day by day.

Seeking to deal with these points on a broader scale, Foote earned a legislation diploma and began practising particular training legislation. On the identical time, expertise was advancing at a tempo the place she might see the potential it held to deal with a number of the extra intractable points she encountered as a instructor.

In 2011, Foote started working with a former professor of hers from legislation faculty who had begun growing a video-based microlearning and evaluation firm with assist from a Small Enterprise Innovation Analysis grant from the Nationwide Science Basis.

The co-founders finally raised greater than $1 million in SBIR grants over a number of rounds to fund the startup, then known as Apply. (It was initially based as AppreNet.)

Her expertise within the classroom was invaluable in constructing the product, she says, one thing she sees typically in corporations based by former lecturers.

“There’s a precept we like, of eager to again enterprise builders which have lived the issue, and so many ladies dwell the issues we see in training,” Foote stated.

Apply went on to boost greater than $8.3 million in seed, Collection A, and bridge funding rounds. It was finally acquired in 2017 after receiving an unsolicited provide from Instructure, which Apply had initially reached out to as a possible investor within the bridge spherical earlier that very same 12 months.

Foote’s success in fundraising and promoting the corporate got here with its challenges, together with these generally skilled by ladies.

Previous to elevating one in all their rounds, Foote confided in a seed investor and mentor that she was pregnant. The investor, a girl, was fast to inform her to not point out the information to potential traders.

Foote, not wanting to place her staff or fundraising efforts in danger, adopted her recommendation. Finally, the investor the corporate negotiated a take care of offered a stage of help that was “fantastic,” and was conscious of the being pregnant earlier than time period sheets had been signed, Foote recalled.

Now, as an investor, she faces totally different dynamics, together with being one of many solely individuals on her staff with out an MBA or a monetary consulting background, each of that are widespread within the VC world.

She tries to lean in on her distinctive strengths and push past her personal, preconceived limits.

“I’ve to remind myself to not attempt to assimilate to different individuals’s strengths, in order that I really feel comfy in a room of sameness once I’m the opposite,” she stated.

Constructing Their Personal Networks

As an alternative of attempting to interrupt into the previous boys membership, Foote and different ladies within the ed-tech investing area have labored to determine their very own: ElleCap.

ElleCap is a community of girls within the training investing area who collect with the only objective of scaling impression for the businesses and entrepreneurs they work with, stated Foote, who has helped manage ElleCap.

It was based out of an off-the-cuff gathering on the ASU+GSV Summit, and has grown to a company of greater than 200 individuals who get collectively at business occasions to community, share concepts, and construct enterprise alternatives.

Networks are “an enormous half” of being profitable in securing funding, she stated. ElleCap has greater than delivered a return on the time she’s invested into it. By way of individuals she’s met within the group, she’s secured offers, related her portfolio corporations to development traders, and acquired beneficial recommendation and help.

The ladies who belong to the group “anticipate nothing again however will assist one another,” Foote stated. In a “very aggressive business,” it’s a community that delivers “experience to carry one another up.”

Deborah Quazzo, managing companion of GSV Ventures, got here up in an period the place, for ladies entrepreneurs and traders alike, there simply “actually wasn’t numerous mentoring,” she stated.

Her intuition, and that of many ladies within the training sector, is to be useful and promote others who’re attempting to clear the identical profession hurdles that they as soon as did.

“Actually we see in training there’s a really pure tendency of the group to mentor one another and help one another,” Quazzo stated. “And there’s numerous sisterhood.”

For her, the clearest approach for ladies to succeed as founders and finally make a soar into investing if that’s their purpose, is to construct profitable corporations.

Rising and scaling a startup within the Ok-12 area has by no means been straightforward, she stated, and present market situations make the duty much more arduous. However the successes she has seen have come as a result of ladies founders and leaders delivered outcomes for his or her traders.

“I believe equality comes with returns,” she stated, “and returns are onerous in training.”

Bickerstaff, the ed-tech CEO who beforehand ran the Australian startup, is attempting one thing new together with her newest enterprise.

After leaving Australia and her CEO position in 2022, she spent six months touring earlier than diving again into ed-tech — simply as generative AI was starting to form business.

Her new firm, AI for Training, grew from these efforts and is presently targeted on offering skilled help to districts on generative AI, together with creating insurance policies {and professional} studying plans for educators.

The corporate landed its first paying district buyer in June, and has since labored throughout 33 states, and has helped co-write AI steering for Chicago Public Colleges and Houston Impartial College District. Its web site providing free AI skilled instruments for districts and educators is approaching 1 million natural visits this 12 months.

Bickerstaff, influenced by her earlier fundraising makes an attempt, has been intentional about not in search of outdoors funding, at the very least for the second.

For now, she doesn’t must. AI for Training hit $100,000 in income on bootstrapping this 12 months — technically turning a revenue as she and her co-founder delayed taking a wage — and are within the black for the 12 months. The launch of their first business-to-consumer product, a digital train-the-trainer module, was so profitable they needed to shut registration after eight days.

“We’ve no exterior, competing priorities, and in addition not one of the nonsense of elevating,” she stated. “To manage your future as an entrepreneur, particularly a feminine entrepreneur, is a extremely constructive factor.”

Her boss, for now, isn’t an investor, she stated –- it’s lecturers and college students like those she taught within the Bronx.